tv Best of Bloomberg Technology Bloomberg June 1, 2019 4:00am-5:00am EDT
♪ emily: i'm emily chang and this is "the best of bloomberg technology." debut, cougary reports first earnings results. is the giant on a path to profitability? and alibaba is considering a megadeal that will bring the company closer to investors. we have a detail on a potential second listing. and facebook shareholders
pressed for more checks on zuckerberg's power. we bring you highlights from the annual investor meeting. uber has had a bumpy start to public life. investors are concerned about the size of the market, the reality of self driving cars, and taking on another risky asset. the ride-hailer gave insights into growth reporting first-quarter results thursday. joined with guests shortly after it came out. >> right now, the focus is on growth and bookings the last thing -- and bookings. last thing you want to do just back yourself into a corner. is just back yourself into a corner. it has been a shaky start since the idea -- the ipo.
emily: what is your take on this continued level of losses? the ceo said it will be an investment here, they will continue to invest -- year, they will continue to invest. >> yeah, and you know where they are investing. there are investing in the food delivery business. fragmented andis you know it is pretty big. even amazon invested in delivery -- deliveroo. emily: what is your assessment of getting to profitability? it was a peakf spending year and he would not commit to that. getsikely is it that uber
to profitability in the near-term? >> i think it is the smart move. ft,n you look at lift -- ly it is something they regret because it puts the mark up there in terms of a profitability perspective. uber is doubling down. , a bettert 2-3 years chance they play for the golden state warriors then become -- than become profitable. right now, the focus on growth and international, putting a fence around the backyard and 90 million orat 100 million users continue to eats.especially on emily: so i wont see you at the nba finals, you have broken my ceo did say that
marketing expenses were going to start to go down. that is welcome news, given that uber have been spending heavily. >> he called out the rationality and the price of the market. basically, they are not subsidizing the writers anymore. they are subsidizing drivers, which is why the pay rates are coming down. but it makes sense, it is a duopoly. over time, it will pay off in the sense that these guys can at least maintain stable rates in the business. dan, what are you looking for over the current quarter, which they did not give a forecast for. what is next? >> we talk about pay grades and
other metrics, right now, it really comes down to that number. can it spike backup, what do bookings look like? eats, there look at is deftly a lot of pressure -- definitely a lot of pressure. it is an execution story. continue to grapple with the valuation, especially with no profitability, but we believe if they execute on the get a stocktart to that maybe gets related -- re-rated, but it comes down to execution? that is why it is such an important quarter. chart i am looking at a that takes a look at short interest for the biggest and most recent ideas.
-- ipo's. the short interest in lyft is way higher than uber. what do you make of that? ,> they were an easier target as well as the timing with uber. they shot themselves in the foot on the first call by not getting pay grades and things -- grades and bookings. lyftnk that is overdone, has improved communications with investors. but no doubt, they are in the investor penalty box. they need to prove themselves, which is why there is so much more focus on lyft. emily: that was dan ives and a correspondent with bloomberg intelligence.
emily: on wednesday, robert mueller broke his silence about the russia investigation. he said that if he and other investigators had confidence president did not commit a crime, they would have said so. had onetepping away, he last message about russian interference. will close by reiterating the central allegation of our indictments. that there were multiple, systematic efforts to interfere in our election.
that allegation deserves the attention of every american. the chief technology officer of security scorecard and bloombergs sharon pettypiece joined us for reactions. >> there was not much new in this conference. he gave a five-minute summary of the report. but the visuals, hearing it from him, has really shaken things up , especially amongst democrats. we have seen a renewed call to begin peach materials. visual yout just the news,ay on tv, on cable of mueller in his own words saying these things. i had confidence the president did not commit a crime, i would say so, that he was bound by justice department rules, something he could not consider. using this platform to remind
people that, despite what the president has said about the investigation being a hoax or politically motivated, that was, at its core, about russian interference. trying to raise that issue and questions about how prepared we are. while there was not a lot of news, is making waves and will get democrats catalyzing around the i-word. emily: facebook just took down another bunch of accounts tied to iran, not russia. haveer, big tech companies tried to make various changes to prevent these things. but even they have said it is an arms race, so how prepared are we from preventing the kind of interference? >> sure.
there really are two parts to what is going on. one is targeted hacking and extraction of information. second was using the platforms as an amplifier to distribute this information. -- his information disinformation. we find larger organizations are better prepared against the first part. why things don't seem going that rate is how do we flag disinfor mation faster? there are those two key points. an organization can run a better defense and prevent episodes what happened in 2060, but there 2016, but from a social media perspective, there is an amplifier affect that is quite different. , some of then details of russian interference
was among what was redacted from the report. we have any indication about what could be under those black lines and whether the public will ever see it? >> i certainly don't have any indication. congress is seeking to get more of those reactions lifted, to seek unredacted information. the president gave the attorney general authority to declassify certain information and use his discretion. it is possible we could see more , but the reason it was redacted is because there is a long conversation about how he could compromise intelligence sources -- it could compromise intelligence sources, and those conversations are still in place. there is a lot we are not going to know. it is a reminder that this mueller report only gives us a small window and all the
information. -- into all the information. this is essentially a summary and we are only seeing a few pieces of the puzzle. emily: jason, i want to ask your opinion on what you think the responsibility of these tech companies should be, whether it is facebook, twitter, or youtube for example. there is a doctored video of nancy pelosi which youtube has taken down, facebook has not. do you think these companies are doing enough to stop miss misinformation? are you concerned they won't make the tough choices that might be needed to prevent this interference? facebooks situation, is claiming satire in terms of why they did not break it down. -- bring it down.
i do think they have a greater responsibility. they are a platform responsible for communicating to the masses. what they are doing is clearly not enough. what level they need to go to is not a simple and easy question. there are legitimate arguments around the protection of satire for reasons of protecting free speech. that said, clearly, we can do better. having platforms that amplify the message of natural -- national adversaries is not good for any of us. emily: the president tweeted today that nothing has changed on the meal report, case is closed. what happens next? this is certainly not the last we will be hearing about the mueller report. >> to some extent, the ball is democrat'ss court --
court. democrats, this is something they have to figure out and solve amongst themselves. nancy pelosi will probably be the key decision-maker. from the white house perspective , the white house has to be on the defense. they will have to get control of the message and repeat this no collusion, move on, case closed. those are the sort of talking points. trying to undercut this investigation by looking into the origins. create a side narrative here. how it plays out politically for the president, whether they pursue impeachment or not, is still unclear. everybody looks back to clinton and the republicans. they suffered a losses and clinton side is -- his popularity go up, but they took the white house in the next
election. so it is all up in the air. emily: bloombergs shannon pettypiece and jason casey from security scorecard. investors areook pushing for change at the top after a cascade of scandals. we tell you what happened at facebook's annual shareholder meeting. and still ahead, following its , alibaba ising ipo considering a second listing in hong kong. we discuss. this is bloomberg. ♪
and so i think that you could tell just by the questions that were asked and statements that people made that there are a lot of angry people at facebook right now, and a lot of people who want to have more or better answers from mark zuckerberg and sheryl sandberg. emily: shira, investors asked a -- asked zuckerberg several times about the amount of power he holds over the company. there was one who had a follow-up, saying something along the lines of, i am asking if you should still be ceo or if you should step down, and he said we are limiting it to one question, moving on. so what do you make of, obviously these proposals were rejected, and we expected them to be rejected, but also sort of the evasive nature of the answers? shira: i mean, in a way facebook is kind of in a no-win situation right now, where everybody is furious at them for a whole host of sins. one of the people who stood up to ask a question was asking why banned herd band --
small business selling hoodie sweatshirts that read "men are trash." so it was that level of shareholder questioning, should mark zuckerberg be a dictator over facebook and why are you blocking my hoodie business. that just shows you the scope of anger at facebook right now, from the sublime to the ridiculous. emily: there was one investor, kurt, who tried to ask the independent board member on facebook's board what she thought of the whole thing and she also sort of deflected? tell us about that. kurt: they had to actually bring her up to answer the question. she wasn't on the stage at that point and had to kind of make a special thing, we want to ask sue, let's bring sue up. the question was, you are the lead independent chair, are you actually going to call a meeting of independent board members without mark zuckerberg? is that something you would do? would you consider holding him to account by making decisions while he's not around? she basically said no, this is not something we are considering, we feel this is the appropriate set up.
emily: meantime, if she wanted to, could she take power? kurt: as independent chair she's really the only person he would have to report to. there are rules that say she can, for example, call special meetings of the independent board but she says she does not want to and doesn't plan to, so for all intents and purposes he basically has the run of the show. emily: meantime, mark zuckerberg did answer many questions, including continued questions about what counts as a speech that should stay up and what should come down. take a listen to one of his answers there. zuckerberg: if the rules for the internet were getting rewritten from scratch today, i don't think most people would want private companies to be making so many decisions by themselves about what constitutes acceptable speech or what people are allowed to say around elections, especially in different countries around the world where we may operate but may not even have a large physical presence.
emily: this as controversy continues to swirl around this doctored video of house speaker nancy pelosi that facebook has chosen to leave on the platform. youtube has decided to take it down. nancy pelosi herself has commented on this, saying this to kqed earlier. speaker pelosi: facebook knows that this is false. they know this is false, and yet they have decided to keep it. we have said all along, poor facebook, they were unwittingly exploited by the russians. but i think wittingly, because right now they are keeping up something they know to be false. emily: what do you make of that? nancy pelosi coming out swinging. shira: it is harsh, may be unfair, but i understand the -- her anger. there is this doctored video of her that has been seen millions and millions of times on facebook. and look, the company did do
things to make sure that it got slightly less distribution in people's newsfeeds, made sure to put a little tag on it that says that there is more information about this video, linking to a third-party articles saying this is a doctored video, it's false, but millions of people have seen it and some people have chosen to believe it. so pelosi is sort of reacting to that, that episode that embarrassed her. emily: kurt, what do you make of the fact that this is the issue facebook is digging its heels in on, the piece of content that facebook is saying, we know it is doctored, but it doesn't truly violate our policy? kurt: i said this earlier this week or last week. this is a really good reminder that facebook's policy doesn't actually mean they take stuff down just because it is fake, right? this happens all the time. this is just a very high-profile example that is getting more attention. when facebook takes stuff down, it is because the people who posted it might be misleading who they are.
pretending to be in the united states but they are really in russia, stuff like that. they don't actually take it down just because it is inaccurate, so this was just a high-profile example and a reminder of that policy, and people are realizing this policy might not be as great as we think. emily: and also it brings back the question, is it simply too much to expect, is it impossible for facebook to be the arbiter of truth? kurt: i think it is. think about it, 2.4 billion people i believe on facebook as monthly users. are you going to stop everything -- every single person who goes on and says, the sky is red, every time a person who miss mis-speaks. i don't think it is a feasible task right now, and they don't want the responsibly of doing it, and that is why they are asking the government to step in. emily: meanwhile, a new
billboard has gone up in san francisco from elizabeth warren saying break up big tech. of course, facebook isn't the only company she's talking about, shira, but to throw this -- but it is fairly bold to throw this up in the heart of silicon valley. shira: lots of people getting their pourover coffee looking at elizabeth warren talking up breaking up big tech. [laughter] her campaign knows what it is doing to get attention. facebook isn't the only company that is part of her policy paper about breaking up tech. amazon is certainly a prominent example. apple and others. this is not a facebook-specific kind of target. emily: but given that facebook is such a large platform and in -- platform, and in a way, because of all the content on there, should they be in a position of being arbiters of truth, even if we believe that is impossible the way facebook d right now.ure
if facebook were smaller, broken in smaller parts, would that be more realistic of a proposition? shira: i am not sure. i think "break up facebook" has become the sort of catch-all solution to this problem of facebook, to any problem of facebook, and i'm not sure it solves the problems people are articulating. so, if facebook it's broken up -- gets broken up into baby bells, into instagram, whatsapp, facebook, you still have multiple internet hangouts with over one billion users apiece that still have to make these difficult content decisions. and i'm not sure it gets much easier dealing with individual companies with one billion-plus users as opposed to one company with multiple products that have a billion-plus users. emily: bloombergs kurt wagoner and shira ovide. coming up, one of the biggest
♪ "best oflcome back to bloomberg technology." alibaba is said to be continuing a $20 billion share sale in hong kong, following the record-breaking ipo in new york in 2014. chinese companies are grappling with how to deal with an increasingly hostile u.s. government. the deal would bring china's -- china closer to home. alibaba isknow is looking at applying for permission to file this ipo later this year.
this is a big twofer hong kong after missing out -- a big coup for hong kong after missing out. this is their opportunity to win back their national treasure of a company. emily: how much if anything does this have to do with trade tensions between the u.s. and china? elizabeth: this is being called trade war ipo. people think this is an attractive time to look for domestic investors, the kind of investors that use this company every day unlike american investors. the other thing that has worked out as hong kong stock exchange has changed its listing rules around companies and multiple share classes. they started doing that after they lost out on alibaba the first time around, had this long
period of consultation, and now it is allowed. it has opened up the market to countries -- companies like this. emily: alibaba shares have taken a dive over the past six weeks or so. can we attribute that to trade tensions? elizabeth: it is hard to tell. tech stocks are always first to get hit when there is market uncertainty. over the last five years, this has become a huge company and way up based on when they went public. a big success. emily: what is next? what steps could alibaba be taking that we will be looking for toward making a final decision about this listing? elizabeth: the bank mandates around this, who they will be getting, and how things are going in terms of conversations with local investors and the demand they are looking at. we are looking at the second
half of this year for them to start this process. they are going in at a very busy time for these tech listings. , not sober and lyft successful, and other companies looking to come to market. this is joining the big march of tech companies raising money from investors. cameron caught up with charles li to talk about their courtship of alibaba. charles: i am happy if this report is indeed correct, that they are planning to come. if they do come, it is not a surprise to us because i have said, when you travel far you come home. everybody does that. it does not mean that you give up your home, your new home. i am sure it is going to come back and keep whatever they are
doing in new york and other places, and coming back to asia. or they couldhere be shanghai or shenzhen. we are very happy that they are coming back and we will be very happy for whatever decisions they make. around the news alibaba's potential listing comes as a trade war is escalating between the u.s. and china. are you assessing your strategy? charles: obviously, this trade war is a global event that will affect all of us in very deep ways. nobody likes it. it is almost watching on the sidelines, praying that this divorce does not take hold and there are ways to scale it back, but we have to see. sophie: what messages are you hearing from potential issuers
when it comes to reviewing their ipo plans in hong kong and elsewhere? charles: everyone is looking at this and asking the question, what does this impact me? ipo's, butnly about about the company, the investment, even somebody that just wants to start a business, is this the time to do it? should i wait? the and certainty that has been created is costly to the entire -- the uncertainty that has been created is costly. they need to take responsibility, quickly define what is really wanted. if you want a we can probably agree. hardu want b, at might be but we can work on it. if you want something fundamentally acceptable to the other side, we are going through a divorce and go into a civil
and peaceful process to allow everybody to get on with our lives. sophie: the sector has been a key focus of part of the rebound with the stock market. they have seen revenue -- pre-revenue terms return to china -- sophie: we had -- charles: we had 10 listings and we are the second largest biotech market locally, and we have another 10 in the pipelines. the key here is that we are launching this very important aapter in the market where huge population is aging. this is the area i see tremendous opportunity, but i am thereuite worried that are also attempts to say that this u.s.-china conflict should also somehow spill over to this
sector, which would be really ill-conceived. unlike trade, manufacturing, technology, you could argue that the rights of china could mean the decline of the market and employment or military security, national security, technology advancement. i am not saying i agree with that, but i could see the reasonable argument. areiotech, before you american, asian, we want -- we are humans. we want to be healthy when we get sick. we want the disease discovered and cured. there is only one enemy. there is no enemy between us. there is one common enemy, disease. emily: that was charles li. raised $2.5 billion
emily: it is a firm that started shaking up silicon valley after its finding -- founding in 2009, and scott cowper -- scott kuper airbnb,me -- lyft, facebook live, and now kuper is out with a new book. he joined us to discuss the current vc landscape. scott: it is good in the sense that there is a tremendous amount of capital.
it is easier than ever to get seed capital. thatave this funny dynamic companies are staying private longer so you have a huge amount of seed capital and a lot of capital going in, in the later rounds. in that respect, it is healthy and a good place to be. emily: venture capital is investing in disruptors but for a long time was never disrupted itself. now you see venture capital firms trying to reinvent themselves. traditionalee the model being disrupted in the future? exists todayhis exist in the future? scott: you are right. the big thing that happened over the last 10 years as we had this introduction of seed firms and it is hard to underestimate how that changed the competitive
dynamic, because you have investors coming into play before venture capital firms. this has forced firms to figure out, what other than money can we provide? emily: are you worried about a softbank that comes in with $100 million? scott: softbank was a party years ago and now there are others playing in that space. what the industry has to worry about is do something other than provide capital. capital is no longer a scarce resource, so for venture to survive it has to evolve and figure out what other than capital can offer. emily: how does andreasen horowitz continue to be disruptors? scott: we have about 160 people today and about 100 work with our investments, everything from
marketing to sales to business opportunities. we have to think about across the lifestyle -- lifecycle for companies so we need to have more emphasis as they go through later and larger advancing cycles. emily: you look across the pipeline in the early stage to the public market. a lot of volatility, trade war, a lot of tech companies going public. lyft, and investor in you have airbnb and slack coming. are you worried about your company's exiting now? scott: i think the market is healthy. some companies have not performed as well as we would like, but if you talk to investors like blackrock or fidelity, there is a scarcity of growth in public markets and where you can find growth that is reasonable, there is a lot of demand for that. some companies have not done
well. software companies have done extremely well and we think that reflects the core demand. emily: i was interviewing the ceo on the-- uber day of the ipo. are you urging companies to stay on their path or take a look at the environment? scott: the fundamental forward -- demand for ipo's and stock growth is there. if the companies are ready and feel like they can perform, this is a fine time for them to go. it is the case that there is more of a preference for software-based companies that have better line of sight stability. people have to be mindful about cash consumption and make sure they know what the street is looking for. emily: there is discussion we are in the middle of a tech cold war with china. would you agree? scott: i don't think we are in a
cold war now, but a lot of stuff is challenging. there was a lot of stuff forlved, it is very hard u.s. companies to take non-us capital in, particularly from capital. i do not think that is a good thing -- particularly from china. i do not think that is a good thing. i do not think it is good policy over the long-term. emily: are you worried about u.s. competitors? scott: i am. i think capital and free -- entrepreneurship free-flowing. we have been a hub for venture capital activity. today, 50% of venture capital activity is in the u.s. a policy perspective that does entrepreneurship, i don't think that is good. emily: there have been
increasing voices for big tech to be broken up. elizabeth warren, chris hughes. do you think there is something to this argument that some of these companies are too big, facebook, amazon, alphabet? scott: it is interesting, and you see it both from the people running for the presidential elections and people in the administration. the ftc is very active. the impact of technology is felt in many ways that sometimes in silicon valley we do not appreciate, and we have to do a better job connecting with regulators. does that mean breaking up or not? scott: i don't have a position, quite frankly. it means we have to do more than we have done historically. we have been lucky in the sense that we have been able to live
in our own hermetically sealed bubble in the valley. theseality is technologies are impacting people in different ways and we have to would rishi eight -- we have to appreciate. just: companies that are heading there escape velocity? scott: we have two funds. the second will be later stage venture, companies that might million,million, $20 $30 million of revenue but are not thinking of going public. we made a recent investment in a company called carta, where they have enough of the business model working and they need more capital to expand. emily: the secrets of sandhill road, what are some of the top secrets that entrepreneurs need to know? how do we make sure that all people know these? scott: that is exactly why we
wanted to write the book. there is still too much asymmetry in this business. my hope with the book is we open that up and help people understand how does the vc business work, what does it mean to pitch vc? my hope is that encourages more entrepreneurship, not just in terms of gender and ethnicity, but geographic diversity. emily: scott kuper. ahead, as global smartphone sales continue to slow, apple is betting on its first handheld to make a comeback. why they are rolling out a new ipod touch. this is bloomberg. ♪
new services including appleseed eplus and apple arcade. it was an instant hit when it came out into thousand one but has been overshadowed by the has been in 2001, but overshadowed by the iphone. they come outme with a major new ios release, the software that runs on these devices, it occasionally loses some compatibility. sinceod touch not updated 2015 is prime for that because it has older components and a processor. they are adding the chip from the iphone 7 that came out three years ago, basically extending the lifecycle of the ipod touch another few years, and making it compatible with the next software update. emily: who is in the market for an ipod touch? you think, just get an iphone or
ipad. who wants to buy an ipod touch? mark: some parents are putting them in their christmas stockings of their kids. this is an entry-level ios device for kids who might not want or need a cellular plan. it is much cheaper. $1000.one x costs this is 1/5 of the price. if you are in the android ecosystem in terms of your phone and want ios as a secondary device, ipod touch is something you might be looking at if you want something like an ipad but is pocketable. these are really big in enterprise. a lot of stores are using them as point-of-sale's devices. it makes sense that apple would update it, but not too much. they are not doing much other
than swapping out the processor, which makes it compatible with services they have been rolling out. emily: i stuff my stockings with bubblegum, but ok. how does this fit into apple's broader content and services push? mark: the ipod touch is the cheapest way to subscribe for apple services. that is what they are pushing this thing for. their marketing and pr is all about the services, which makes sense. they have talked about the prices of the augmented reality device. ipod fromsor of the 2014 was not fast enough. other than that, you are not seeing a big change. got wwdc coming up next week and you reported on
a lot of things we expect apple to unveil. what are you looking forward to for the event itself? mark: i am expecting big updates that runos and the os on the ipad and the mac. write ipad apps will be able to port them to a mac, so look for twitter and facebook to get into the mac app ecosystem for the first time, or the first time in a while in the case of twitter. the apple watch will become more independent. that is a big theme driving the app store to the watch, a big move for consumers and developers looking for additional exposure. on the iphone side, i don't think it will be a significant update but there will be lots of tweaks around the system,
hitting on the wish lists of some consumers. the ipad will get an update to make it more compatible with pro features. what you saw them do last year was amazing. the ipad pro harbor wide is one of the best tablets you can buy. the software has been behind and they are going to fix that. emily: it is a galaxy now not so far, far away. disney unveiled its wildly anticipated star wars, alex e edge theme park in california -- galaxy edge theme park in california. ed ludlow got an early look inside. addition may not be in a galaxy far far away, but standing in the first full-size millennium falcom ever built, it feels like it. two main can attractions --
attractions, one is centered around the millennial falcon. you attempt to smuggle goods across the galaxy. open this year, they will rise of the resistance, which will mimic a fight with the world order. fans can build their own lightsaber or droid. neither come cheap. is light cyber -- lightsaber $200 and the droid, $100. the segment accounts for more than 60% of disney's revenue and it is becoming more important at a time that disney's those profitable business, tv, is losing viewership. they invested $4 billion across parks in 2018. i spoke to the chairman and he said investors should expect that kind of investment to continue. >> walt disney said disneyland
will never be complete as long as there is imagination left in the world. you couple that with walt disney ing.ine neari -- imagineer ed: the gross receipts from the almost $5ed with billion. disney hopes a galaxy edge park would drive more merchandise. franchise will have less traction in key markets like asia and specifically, china. withinld out in china two hours. bloomberg expects the force to be strong with disney, especially when they report third-quarter revenues in august. emily: that does it for this edition of "the of bloomberg technology." you can tune in p.m. new york,
jonathan: from new york city, i'm jonathan ferro. bloomberg "real yield" starts right now. jonathan: coming up, fresh trade tension providing even more fuel for the global bond market rally. 10-year treasury yields breaking down to new lows for the year. bund yields printing a new record. uncertainty leaving high-yield credit exposed. spreads widen, funds suffer. another week of outflows. we begin with a big issue, more fuel for the treasury market rally. >> the bond market rally right now is a risk off trade. >> massive flight to safety. >> the flight to risk-free